A group of the German government's top economic advisors have lowered their forecast for German growth this year, pointing to the ongoing problems across the banking sector in the eurozone.
A panel of top German economic experts announced on Thursday that it lowered its expectations for the country's growth this year despite measures taken by the European Central Bank (ECB) to calm European markets.
The panel of pundits, who also serve as advisors to Chancellor Angela Merkel's center-left coalition government, altered their 2012 growth forecast to 0.8 percent, down from 0.9 percent in their previous estimate that dated back to October of last year.
Europe's biggest economy is set to grow much slower than last year when the economy expanded by a full 3 percent.
"There are still substantial risks for the German economy, even if the ECB has helped calm the situation somewhat," the report said.
"There are increasing signs that the feared economic downturn can be averted, but the tensions in the banking sectors of many eurozone nations remain so great that they threaten to hamper credit supplies in the private sector," the report added.
Growth down, but unemployment too
The expert panel, which is referred to as "the five wise men" although it currently comprises four men and one woman, expressed confidence that unemployment in the country would continue to decline in 2012, with the annual average jobless figures expected to drop to 2.863 million from 2.976 million in 2011.
The experts also provided a positive outlook for Germany's public finances, saying that overall debt could slip to 78.9 percent of GDP, down from 80 percent last year.
Although the panel of experts slightly trimmed its 2012 growth forecast, it appeared more optimistic than Germany's central bank, the Bundesbank, which expects the national economy to expand by only 0.6 percent. The government hopes for 0.7 percent growth this year.
hg/sms (dpa, AFP)